Kiribati's per capita GNP of less than $1,000 makes it one of the poorest countries in the world. Phosphates had been profitably exported from Banaban Island[?] since the turn of the century, but the deposits were exhausted in 1979. The economy now depends on foreign assistance and revenue from fishing licenses to finance its needed imports and development budget.

The expiration of phosphate deposits in 1979 had a devastating impact on the economy. Receipts from phosphates had accounted for roughly 80% of export earnings and 50% of government revenue. Per capita GDP was more than cut in half between 1979 and 1981. A trust fund financed by phosphate earnings over the years--the Revenue Equalization Reserve Fund--does still exist, and contained more than $350 million in 1999. Prudent management of the Reserve Fund will be vital for the long-term welfare of the country.

In one form or another, Kiribati gets a large portion of its income from abroad. Examples include fishing licenses, development assistance, worker remittances, and tourism. Given Kiribati's limited domestic production ability, it must import nearly all of its essential foodstuffs and manufactured items; it depends on these external sources of income for financing.

Fishing fleets from South Korea, Japan, Taiwan, and the United States pay a licensing fee in order to operate in Kiribati's territorial waters. These licenses produce over $20 million annually, with a surge in 1998 to nearly $30 million when El Nino climatic conditions boosted the local catch. Due to its small size and spread-out nature, however, Kiribati also loses untold millions of income per year from illegal, unlicensed fishing in its exclusive economic zone.

Another $20 million to $25 million of external income takes the form of direct financial transfers. Official development assistance amounts to between $15 million and $20 million per year. The largest donors are Japan, the United Kingdom, Australia, and New Zealand. Remittances from Kiribati workers living abroad provide another $5 million.

Tourism is one of the largest domestic activities. Between 3,000 and 4,000 visitors per year provide $5-$10 million in revenue. Attractions include World War II battle sites, game fishing, ecotourism, and the Millennium Islands[?], situated just inside the International Date Line and the first place on earth to celebrate every New Year.

Most islanders engage in subsistence activities ranging from fishing to the growing of food crops like bananas, breadfruit, and papaya. The leading export is the coconut product copra, which accounts for about two-thirds of export revenue. Other exports include pet fish, shark fins, and seaweed. Kiribati's principal trading partner is Australia.